15 July 2022
Quite often new entrepreneurs start off exploring other sideline businesses while still in the employ of their current employer. Take the example of a textile worker that starts to set up her own clothing business on the side by making clothes after hours. Is this allowed or could her employer fire her for this even if it does not affect her work responsibilities?
The short answer is ‘yes’ an employee could be fired for such ‘moonlighting’. In any employment relationship, the employee has a duty of good faith and confidence to the employer and an employer must be able to place unfettered trust and confidence in the employee and expect that the employee must advance the business interests of the employer at all times.
This entails that an employee must conduct herself in a manner which is not destructive to the employment relationship. Fundamental to this is the requirement that an employee must at all times disclose any circumstances which may result in a conflict of interest with their employer.
Moonlighting, which essentially entails an employee working for another employer outside of working hours, may amount to a conflict of interest with the employer, hence it is normally required that an employee must disclose any of their outside commercial activities which may conflict with the business of their employer. For moonlighting to constitute a disciplinary offence however, there must have been a rule against moonlighting and the employee must have been aware of that rule.
In a recent case decided by the Labour Appeal Court (LAC), the LAC had to determine the scope of the duty of good faith owed by an employee to the employer. In this case the LAC held that the employee had failed to disclose an essential and important fact namely that she had been running a ‘side-line business’ in the market for the sale of meat products which was the same business as that of her employer, though they were not identical meat products.
The LAC also found that it did not matter that the employee was able to discharge her duties to her employer as the fact that she failed to disclose her side-line business, and which business involved the sale of meat products, she had acted in violation of her duty of good faith to her employer and thus her dismissal for dishonesty was justified.
This case sets out important considerations when it comes to moonlighting. It makes it clear that where a conflict of interest may arise, it is not material that an employee continues to render satisfactory service to the employer or that the possible conflict will not result in a real competition with the employer. The employee should at all costs avoid activities which could create a conflict of interest or obtain the prior permission from the employer before continuing.
Whether there is a conflict of interest will however always be a factual consideration which will depend on the nature of the business of the employer, the terms of the employee’s contract of employment and the nature of the moonlighting activity. This means not all moonlighting will automatically be a dismissible offence and our courts have even held that seeking alternative employment while employed does not constitute a dismissible offence. Employers should however ensure that they address their views regarding moonlighting clearly in their terms and conditions of employment and ensure that employees are aware of these to avoid any misperceptions by employees as to what they are or are not allowed to do.
Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy has been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content without further written confirmation by the author(s).